Thanks for destroying the Economy

QFT! I wasn't! But I would have if Usagi wasn't on "ignore". hehe.

I do agree SL does not handle changes well it just springs it on us with little or no warning and sometimes casts people to the wolves or lets them suffer the consequences on their own... A better way of handling this or any change would be to give notice months ahead of time over and over until most of us are tired of it and bored and then do it slowly... or at least give the date of when it will happen to let us get used to it and prepare for it. I have no money in any bank and never will but I have seen many changes handled poorly by sl none of which have affected me personally but wanted to comment on them for the sake of us all as a whole.

Elinah

Clearly you have never taken a macroeconomics course. You are over reacting.

You mean there are people out there who thought investing virtual money in a virtual bank with absolutely no means to guarantee that virtual money thought it was a real world investment?

I'd like to point out this quote as the crux of LL's decision. It also demostrates emphatically why the SL Economy is not destroyed, but rather is saved.

Perfectly legal institutins, like WSE, will simply get their charters, and other legal licenses, and continue on. Providing a valued service to their customers, with the added benifit of said customers having a more secure feeling in those services. As Rob stated, it will probably bring more buisness to those legit institutions.

What this policy of LL will "destroy" (or at least hamper) are the scammers and fly-by-nights that are just out to make a quick buck and leave. Without being able to show proof of credibility, the scammers will not be able to gain their charters. Just like "John Doe Scam" can't open up a bank in RL without proper credentials.

I imagine that legit buisnesses are mildly grumbling about the loopholes and red tape right now, but are more just pleased by this. They go through the steps to get the charters and step into a very very narrow nitch in the economy that has immense profit growth potential.

In summery: This helps the economy as it only hurts the scammers. End point.

~Jessy

I've had classes in REAL LIFE economics. SL economics are hardly representative of RL economics. To wit:

In your example, it costs NOTHING BUT TIME to make your products. Then, it costs VERY little to get a shop in malls (many malls are L$50-250 per week; that's no more than US$5.00 per MONTH). Some places let you start for free, even. Advertising? Well, SLX and its ilk are "free" (just a small percentage of your profit), forum posts are free, and classifieds are cheap, if you don't wanna be stupid and go for placement (not worth it in the vast majority of cases, IMO).

I can't imagine why ANYone would want to go out and borrow money to start a SL business. There just isn't any significant barrier to entry, outside of time and talent, which is what business loans are all about in the first place. The only reason I can think of has nothing to do with necessity, but getting someone else to fund someone's ridiculously and excessively grandiose ambitions which will almost never meet a rational RoI.

QFT

What are all these supposed business ventures that can return huge profits but need massive Linden$ start up costs?

Id love to actually see one.

Clubs?

Ahh but they don't return big profits

A simple analysis of the exponential function and doubling times shows how all of the banking schemes in SL are unsustainable, and therefore ponzis by default.

Rates from SL Investors Bank (from August)

Basic interest rate: 0.118% DAILY
Accounts over 30,000L$: 0.14% DAILY
Accounts over 150,000L$: 0.195% DAILY

The doubling time for a rate can be approximated by dividing 70 by the growth rate. For the basic tier, it is 600 days; for the middle tier 500 days; and for the high tier it is approximately 1 year. Even the lowest growth rate is absurdly high, but a doubling time of a year is incredible.

This means that the bank must be able to double its invested money every year to year and a half just to break even and maintain itself, not to mention turn a profit. The bank mentions that its assets are "mainly mainland holdings and private estates." For private estates, the most in-demand sims on the grid such as Caledon have operating costs that are around double that of the yearly gross profit, so this is not a viable source of sustaining such an incredible rate of return. Much of the arbitration between inefficiencies in the mainland market is already filled by major landbot runners such as Elanthius Flagstaff, and by traditional land barons. Nomatter how you look at it, there is simply no way to sustain such growth without robbing peter to pay paul- that is, requiring an exponentially growing number of new deposits to cover the exponentially compounding interest payed out.

Give me the statistics for any other bank, "stock exchange" or the like, and I will show you how it is unsustainable by construction, and thus must be a ponzi.




I don't doubt that some people are legitimate; Sarah Nerd is one I know. However, it is the system as a whole that is fundamentally dishonest and unsustainable.



I never "invested" a single ellbuck into any of the banks. Please describe me which are the "good banks and exchanges." If they are transparent (which is one of the prerequisites of being "good" they'll have all the necessary statistics on a site. And if they have the statistics, a simple analysis of the math will show how they are unsustainable.

but Aminom... didn't you need INVESTMENT capital for your SL biz...

no...?

hell, you are a poster child for how to start off in a Linden sandbox and sell your stuff successfully on a budget.

I'm with you all the way on this topic I find it amusing to see people tell successful content business operators in SL how little they know about economics You stated the truth here - it's the system that's fundamentally dishonest and unsustainable. Maybe some of the owners of them didn't realise it - maybe they did. At the end, it couldn't continue, and it threatened all of us with very legitimate businesses in SL.

So... this too shall pass... and I am glad to see this day pass

Banks are NOT a fundamentally necessary part of an economy- at least banks as we know them. However, that's another issue entirely What's important is that they make no sense in SL. The "tools of production" are free (Gimp, Blender etc), and the only resource one needs is time- as you mentioned, using software to create content. Moreover, you don't have manufacturing costs because you can endlessly duplicate stuff for free. Need a shop? If you are a true member of the community already (and not just in it for the money,) then many people are generous enough to let you use land for a while until you get enough money to buy your own land or expand. SLEX and OnRez listings are free.

The only case where capital is really needed is in value-added sim developments such as Azure, Caledon and Ryder. In this case, it is much better and transparent to find business partners rather than rely on an artificial and unneccessary stock system; you are working DIRECTLY with investors who KNOW YOU. Community-building is also incredibly important for the success of such ventures, so if you have this necessary skill already, you will be able to find people to partner with and invest directly.

Did he actually write that??? He finds fault with LL because they are "denying to take responsibility for the poor decisions if their customers"? Words fail me.

I can't believe it took 136 posts before someone caught that one. Great job. It's classic.

ROFL! I had to go back to reread that one. I too, make bad decisions from time to time. I have tons of things I don't use in SL. All poor decisions. I DEMAND Linden Labs take responsibility for all of them!

BTW it was post #46 for those who want to reread it.

hehe. I'd read the post some time ago, but it wasn't until someone quoted part of it earlier today that I noticed that particular bit. I went back through the pages searching for it too. lol

I originally read the OP's title for the thread as:

"Thanks for destroying the e-CON-omy"

And in that respect, and only that respect, I wholeheartedly agree with the OP.

well...at least WSE used lube......

/me runs and hides in that thar hill with Mitzy

This is e-ridiculous. I'm calling my e-lawyer and e-suing.

i e-charge $400l per minute, $900l if you expect to win.

Unless attached to a mall (and thus offset by rent or/and ads) they return NO profit and the vast majority run at a loss.

As of 5 PM SLT, the base price for a mainland mature 512m plot is 8.4L/m. Yesterday it was 8.3L/m. Prices have been drifting up .1L every day or two. So for land prices this bank run hasn't had any effect yet.

Exactly. This should have been done early to minimize exposure and damages. The Lindens are late but right this time.

I just know that I did deposit some money at a "bank" before but once I calculated the annual return, I knew it was impossible to keep up. More than 50% interest on savings? Sure... and withdraw.

I wonder why other people didn't do that themselves. Pipe dreams?

LOL the Yorkshire blogger can't handle the heat in the forums! ROFL

Letter opened to the getlteman of the Linden

Your action of participation on the banks absolutely is mistaken and inopportune.

The damages have been made and you have allowed this. You have allowed the escape of some persons with our moneies hiding to you behind the fact that you do not take part in the relationships between the customers. Hour at a distance of months from the Ginko failure you notice that the banking system is failed. This after that who had to go it has made it in all comfort while to operate it is remained who has lead a serious job.

Like fairies hour to expect that people who have invested moneies in order to elaborate a virtual banking system you carry you a governmental concession or a letter of a true bank, studied instead other shapes of guarantee.

I hope you will see again your Policy.

Excused for English but I am writing with a translator….

It would be opportune that policy therefore the important came translate also in the other languages (task you do not lack the moneies for one translation)

I'm just bummed about these new regulations because I was ENJOYING playing the SL stock market. I only have a few bucks invested in the WSE, maybe enough to cover a month or two for my basic account and 512m2 of land. Hardly enough money to keep me up at night worrying.

To be honest I found the interest the WSE "bank" pays out to be disturbingly high. Did I realize that the money I had "invested" as just going into another players account? Yes. Did I know there were no real safeguards on the system? Yes. Did I realize that the owner and all those IPOs could jut take my money and run? Yes. Was I having an amount of fun that I considered commiserate with the amount of money I was risking? YES.

I as never much into gambling when it was allowed. I don't find inherently rigged games of chance that entertaining. Are these stockmarkets much different from that? Not particularly. But they are more involved. And to be honest, somewhat educational. Well, I found them to be so at any rate. I'd also add that even the complete scams are somewhat educational. Better t lose a thousand lindens to some ponzi here and learn a lesson about caution rather than lose a thousand dollars in real life.

Anyway, my point is, I knew the risks going in. And if the WSE never reopens I can't say I'll be too shocked. Nor am I that annoyed about the money I'll lose. What DOES annoy me is the fact that the collapse of ALL of these organizations is being intentionally caused by Linden Labs themselves. I don't like it in the real world when the government is empowered to grind of all the world's sharp edges and wrap everything in bubblewrap to "protect us from ourselves" and I don't find it any more endearing in SL. As long as we have choices in life, there will be risks. And I don't need, want, or like LL unilaterally "protecting" me from these risks... from these CHOICES.

Keep whittling away the risks, and soon well have no real choices LEFT.

I'm not one of those whiny fools who screams "This is it! It's the last straw! SL is going to die because of this! The sky is falling, the sky is falling!" I'm sure SL will carry on well enough in any case. But I will say that this may be the last straw for ME personally, if the stock exchanges all disappear into the murky depths of regulation. It just might not be worth the bother for me. (and NO, none of you can have my stuff! ;>